Today I like to share with you some interesting lessons that I’ve learnt from my first few years being a new investor. I must admit that these are lessons that I wish that someone had told me about.
Nevertheless, I want share this with everyone in hopes that you will be able to learn from my own investing experience instead of making these mistakes.
Lesson 1: It Is Never A Guarantee (Even though they say it is)
You may come across some types of investment that telling you that your capital is guaranteed. The company or the consultant might be the one telling you that they have such a guarantee. But always remember that it never is.
When it comes to investing, there can never be any guarantees. Always make it a point to decide to invest money that you can afford to lose.
Sometimes, people will try to say whatever they can in order to close an investment deal. And when something goes wrong, their word of guarantee seems to disappear.
Not that all investments are bad. The point is to not make a decision to invest in something just because someone has told you that they will guarantee your money.
Look at the fundamentals of the investments and make your decision from there.
Lesson 2: Put a Little Here & A Little There
You may have heard of the saying “never put all your eggs in one basket”. That saying is totally true.
In the past when I was new to investing I remember that if I come across a great investment opportunity, I will have the tendency to put a lot of money into it.
I think I probably did that because it felt like a great opportunity I didn’t want to miss out on. But I soon realise that it is better to rather put your money into many great opportunities rather than only one.
The fact is, every investment has a risk. No matter how great the company is. It is without question that every investment has some form of risk. Therefore, it’s much better to spread your investments out.
For example, if there is a stock market crash and an opportunity arises, would you put all your money into the stock market?
In my opinion, yes it is possible actually. But you must spread it out and invest into a basket of stocks instead of putting all your money into a single stock.
Lesson Number 3: Never Go All In, Have Some Cash on Standby
This lesson is related to lesson number 2 in some ways. Whenever there is some form of investment opportunity. Don’t be quick to put in all your money into it.
No matter how convincing or tempting it might be, don’t ever do that.
Stop, think 7 times before you even do that. 1 reason is that what if things don’t go in your favour. Sometimes the least unexpected things just happens.
Be wise and don’t go all in. There are plenty of opportunities out there for you to be able to grow your wealth. So have a mindset that opportunities are plenty, instead of a fear of lost opportunity mindset.
And because opportunities will always arise, you want to be able to have the ability to take advantage of them. You won’t be able to do so if you’re already heavily invested in 1 single thing.
Don’t forget that you probably also need to standby cash on hand for emergencies.
I do hope that this sharing will allow you to make better decisions in investing. This is especially if you are only just starting out in investing.
How about you?
Are there other highly important lessons any of you wish to share? Please tell us by commenting below!